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Ouid ve elianged in amount. Late in the year, Software City began carrying WordCrafter, a new word processing software p gram. At December 31, Software City's perpetual inventory records included the following cost ns layers in its inventory of WordCrafter programs: Purchase Date Nov. 1 Dec. 12. . . . Total available for sale at Dec. 31 Quantity Unit Cost Total Cost $400 310 8 20 28 $3,200 6,200 $9,400 ember 31, Software City takes a physical inventory and finds that all 28 units of Word- r are on hand. However, the current replacement cost (wholesale price) of this product a. At Dec Crafte is only $250 per unit. Prepare the entries to record: 1. This write-down of the inventory to the lower-of-cost-or-market at December 31. (Com pany policy is to charge LCM adjustments of less than $2,000 to Cost of Goods Sold and 2. The cash sale of 15 WordCrafter programs on January 9, at a retail price of $350 each Now assume that the current replacement cost of the WordCrafter programs is $405 each. A larger amounts to a separate loss account.) Assume that Software City uses the FIFO flow assumption. b. hysical inventory finds only 25 of these programs on hand at December 31. (For this part, return to the original information and ignore what you did in part a.) Chapter 8 Inventories and the Cost of Goods Sold 1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses te 3. Which cost flow assumption (FIFO or LIFO) results in the lowest net income for the peri FIFO flow assumption LIFO flow assumption Would using this assumption really mean that the company's ope Explain rations are less efficient

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